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First ABS Deal with Bond Connect in China: Zhong Lun advises Ford Automotive Finance (China) Limited on a RMB 3.77 Billion auto mortgage loan securitization 2017-08-18

On August 17, 2017, Ford Automotive Finance (China) Limited (“FAFC”), a wholly owned subsidiary of Ford Motor Credit Company LLC (USA), successfully issued Fuyuan 2017-2 retail auto mortgage loan asset backed securities. This is the first securitization deal utilizing the “Bond Connect”, set up under the central bank’s “Interim Measures for the Connection and Cooperation between the Mainland and the Hong Kong Bond Market” allowing offshore investors to participate in China’s inter-bank bond market. The securities are rated by four rating agencies--two international ones and two domestic ones, which is not typical in China ABS market.

 

Zhong Lun team consisting of partner Wantao Yang, associates Liz Mujuan Lin, Helen Xiaozhu Zhong and Fangjiao Gao advised the deal. In 2014, Zhong Lun assisted FAFC in launching its first ABS, also the first securitization deal by a wholly foreign owned enterprise in China.

 

The total issuance is RMB 3.77 billion (around USD 564 million), consisting of Senior Class A Notes, Senior Class B Notes, and Subordinated Notes. The Senior Class A Notes and Senior Class B Notes are respectively rated by China Bond Rating Corporation and China ChengXin International Credit Rating Co. Ltd. as AAA and AA+, by Fitch Ratings as AA and A+, and by Standard & Poor's as AAA and A. The trustee and issuer is Shanghai International Trust Co., Ltd. The lead underwriter is China Merchants Securities Co., Ltd. and the joint-lead underwriters are Bank of Communications Co., Ltd., HSBC Bank (China) Company Limited, and Standard Chartered Bank (China) Limited.